Spot gold was off 0.2 percent near $1,319 an ounce by mid-morning, having hit a two-month high of $1,325.90 last week. The metal has gained 2.4 percent in the second quarter of the year, after rising nearly 7 percent in the previous quarter.
U.S. gold futures for August delivery were flat around $1,318 an ounce.
In wider markets, the dollar struggled to get off a one-month low against a basket of major currencies early on Monday, having posted its biggest weekly fall in over two months after a batch of disappointing U.S. data.
Gold was also supported by escalating violence in the Middle East. Iraq's army sent tanks and armored vehicles to try to dislodge insurgents from the northern city of Tikrit on Sunday, the second day of a pushback against a Sunni militant takeover of large stretches of Iraq.
Fighting also flared between Ukrainian forces and pro-Russian separatists around the eastern flashpoint city of Slaviansk on Sunday, despite a truce extended until Monday night, a deadline also set by EU leaders considering new sanctions against Russia.
In times of political or financial trouble investors often turn to gold, which can be perceived as insurance against risk.
As a gauge of investor sentiment, hedge funds and money managers sharply increased their bullish bets in gold futures and options to their highest since March, data from the Commodity Futures Trading Commission showed.
--By Reuters. For more information on precious metals, please click here.